How does the NPP work?

The Basic Infrastructure includes a network (which connects participants), a switch (which moves messages between participants via the network) and an Addressing Service which enables transaction accounts to be identified by a simpler payment address such as an email address, phone number or ABN number. Other address types may be available in the future. The Basic Infrastructure will always be open for business, 24 hours a day, 365 days of the year.

The Fast Settlement Service

The Fast Settlement Service (FSS) is provided by the Reserve Bank of Australia. This world-leading capability enables every single payment made on the platform, regardless of its size, to be settled in real-time in central bank funds, across each financial institution’s Exchange Settlement Account (ESA). This allows for completion of settlement between financial institutions prior to crediting of the payee’s bank account.

Overlay Services

‘Overlay Service’ is the name the industry has given to the payments related products or services, and that can leverage the benefits of the Basic Infrastructure. These products or services could offer vastly different experiences, or similar experiences, and in many cases could compete with each other.

This technical explanation simply means that the infrastructure of NPP allows for real-time payments between two or multiple people in under a minute. It is active “24 hours a day, 365 days of the year”, and backed by the Reserve Bank of Australia (RBA), so the platform is fast and secure.

It’s no secret that most of us can’t remember their BSB and account details off by heart, making the transferring of money a longer process when you have to go hunting for these details. This is where PayID comes in.

What is PayID

Forget remembering pesky BSB and account details, now when you want someone to send you money you can give them your PayID instead.

Your PayID is something easy to remember that you will register, such as your:

Email address

Mobile number

Australian Business Number (ABN)

Australian Company Number (ACN)

Australian Registered Body Number (ARBN)

Australian Registered Scheme Number (ARSN)

This will be securely linked to your bank, credit union or building society account.

How does PayID work?

Once the NPP and PayID is rolled out, this is how the process will work:

Register – when the NPP is rolled out you will be prompted to register through your bank, credit union or building society.

Choose your PayID – you will choose your easy to remember PayID linked to this account.

Pay – You will now be able to give someone this PayID and they will pay you in real time.

According to the PayID website, the registration process will require a number of identification and verification steps to confirm you are the rightful owner of that mobile number and/or email address etc. This also means PayID will make fraud more difficult as a stranger will not easily be able to create a PayID using your personal details.

A PayID can only be linked to one account at any given time. You can, however, create as many PayIDs as you’d like “as long as you can prove to your bank, credit union or building society that you are the rightful owner of that information (such as the phone number or email address) you’d like to use”.

Can I use it for international transfers?

Unfortunately, the NPP only applies for national payments. Moving forward, hopefully this model will be adapted to allow for instant international transfers.

How secure is PayID?

In terms of security, the first thing you should keep in mind with PayID and the NPP is that you can only use it to pay other people. No one can use your PayID to access your account or withdraw your money.

Further, when you want to make a payment you will now see the name of the person you are sending money to (registered through their PayID) before you approve the transaction. This will mean that unlike using a BSB or account number, payments on the NPP using PayID will now give you peace of mind that you’re sending money to the right person.

As payments will now reach accounts in under a minute, there is the risk that your bank, credit union or building society may be slower to catch any scamming or fraud on your account. Luckily banks currently protect their customers in real-time through tools that monitor your payments, and these tools will be extended to cover the New Payments Platform.

What other changes can we expect with the NPP?

On a fun note, the NPP will now allow you include emojis in your payment descriptions! However it’s up to you how you decipher what emojis are for which transactions.

Sent documents

When you make a transaction through PayID, you will now be given the option to attach documents to the payment, including invoices and receipts.

Never have an awkward bill moment at dinner again

Instant payments through PayID means that no longer will Aussies have to awkwardly chase up their friends for the dinner bill. All you’ll need to do is provide your fellow diners with your PayID (mobile number, email address) and the money will be instantly back into your account.

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